Canada Emergency Wage Subsidy (CEWS) for employers with reduced revenues
Introducing a wage subsidy for employers with reduced revenues. The subsidy is available for wages paid in six 4-week periods from 15 March 2020 to 29 August 2020. Employers are eligible for the subsidy in relation to a period if they have a qualifying revenue decline based on the leading calendar month. The required revenue decline is 15% for March, 30% for April and May, and is assumed to remain 30% for June, July and August. Employers may choose to compare their revenue level to the average of January and February or to the same month in the prior year. Once an eligible employer has determined that it has experienced the qualifying reduction in revenue for a particular claim period, it is also deemed eligible for the immediately subsequent claim period. For existing employees, the subsidy is up to the lesser of 75% of pre-crisis wages and $847 per week. For new employees, the subsidy is 75% of wages paid, up to $847 per week. “Pre-crisis” refers to the period of January 1 to March 15th. The level of subsidy is assumed to remain the same for June, July and August. Employers do not have to pay employees their full pre-crisis wages to qualify for the wage subsidy. Eligible employers can also recover 100% of employer-paid contributions to Employment Insurance, the Canada Pension Plan, the Quebec Pension Plan, and the Quebec Parental Insurance Plan in relation to employees on leave with pay. Eligible employers include individuals, taxable corporations, and partnerships as well as non-profit institutions and registered charities. Public bodies are not eligible. For employers that are eligible for both the Canada Emergency Wage Subsidy and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period would generally reduce the amount available to be claimed under the Canada Emergency Wage Subsidy in that same period. The PBO estimates the total net cost of this measure to be $56 billion in 2020-21. The time horizon for this costing is aligned to PBO’s current Economic and Fiscal Scenario, although there may be potential fiscal impacts for subsequent years.